Anu Hariharan

2/ My observation is that while there is some pressure on late stage valuations, the narrative is way too generalized

3/ First, there are just a *few* late stage investors who can write a $100M check in one round. The narrative seems to suggest there are several of them - so called "dumb money" - I can count 15, maybe 20 of them, globally

4/ Therefore, if a Company is "in the habit" of raising a couple of $100M every 12 -18 months, the Company has almost surely met each of these investors, and in every round...

5/ YC has financed a few of these high burn businesses, and almost every individual investor that invests in our companies has not only met the company in every round, but does a ton of diligence on them every time...

6/...including latest market share analysis, burn trend analysis and most important, checks on performance vs. projections (in previous rounds) from *actual* board decks...(seems hard to believe, I know :))

7/ So, in my mind, this is not a lack of competence as the narrative goes, nor is it necessarily dumb money, but more simply a quest for growth and investment yield in a world awash with cash

8/ A lot of capital is not necessarily bad - though it sometimes creates poor behavior by management - though I would argue that the blame falls equally to the investors turning a blind eye to this behavior - but these examples are few and far between, but naturally get amplified

9/ In fact, without access to plentiful capital some of the current consumer utilities simply would not exist - Ride sharing, Food Delivery, some Fintech, for example...

10/ ...but just because they have have raised more than "$250M" and are not going public does not necessarily make them bad businesses!

11/ As long as burn is is used to improve the operational moat and discount driven burn is contained and the path to profitability is clear...

12/ Which inherently means that the business is operated in a rational manner (Stripe!), the decision to go public is simply something for management to make...

13/ Back to capital intensity, if a company needs to raise $500M+ Softbank is the only option out there more often than not...

14/ Now you may not believe in the sustainability of a capital intensive business, but even Softbank is not writing that check size without deep diligence....perhaps it's just that their return expectation is much different vs. a typical growth fund

15/ And as markets get jittery, founders are smart and adapting. They are aware of the fickle nature of the financing market, and are paying close attention to capital needs and long term fundamentals of the business.

16/ and the best founders we know and have invested in absolutely hold themselves accountable to quarterly projections even if they are private and late stage, even if investors are "OK with misses" (though I personally don't know many who are!)

17/ I do agree however that the pendulum has swung too far in the direction of staying private (sans IPO) but the fact is there is still plenty of capital even today for growth, though rounds are taking longer to close...

18/ I think this is simply a function of valuations getting ahead of themselves from circa 2018/2017, and savvy growth investors are looking for a better price and entry point...not because there is a liquidity issue

19/ Even though there might be pressure at the moment on late stage valuations, the best companies continue to grow and edge towards $1 in FCF....which means there are some selective great opportunities today and there will be more to come...